Video Transcript
Target Market
A marketing strategy is selecting and describing one or more target markets that a company's product or service will identify for business opportunities. A target market is a defined group most likely to buy a company's products or services. This group usually has similar product needs, such as college students who usually have an appetite for affordable cars, technology products, dorm room goods, etc. Once a target market is identified by a company, a target market strategy needs to be created in order to decide on how to promote, communicate and reach the group. There are three ways that a firm can identify target markets.
Identifying Target Markets
The first step is to conduct an MOA (Marketing Opportunity Analysis). This analysis allows companies to investigate the potential size of the market, profitability potential, and the amount of competition. The next step is to choose the basic target market strategy. The three strategies for selecting target markets are pursuing entire markets with one marketing mix, concentrating on one segment, or pursuing multiple market segments with multiple marketing mixes.
Examples of different target markets could be men who drink diet soda (co*ke Zero), parents with young children (Fisher Price), or college students who need affordable cars (Scion). A company that concentrates on an entire market with one marketing mix would be producers of milk. They know that a large market exists for their products. An example of a company that targets one single target market would be Lady Foot Locker - of course women who are active.
The last target marketing strategy example is for pursuing multiple marketing segments with multiple marketing mixes. The king of this strategy is Disney. Think of the different types of Disney ads you see. There are ads appealing to young parents with kids, teenagers, honeymoon couples, and even senior citizens. Disney promotes different messages to each of these different segments very successfully. Disney's message to parents with kids is all about making sure your kids don't miss out on a Disney experience. The message to honeymooners is all about having your fairytale wedding at Disney and be a real Prince Charming and Snow White. Lastly, their message to seniors is to come to Disney to feel young again. Once a target market (or markets) have been chosen, then the company must plan on the correct way to reach the consumers with the best product, service, price, place, and promotion.
Marketing Mix
A marketing mix is the perfect selection of product, place, price and promotion strategies used to have mutually beneficial exchanges with a target market. Think of it as the ingredients needed for the sale. In the marketing world, a marketing mix is also referred to as the Four P's. Sometimes a product will fail because just one part of the marketing mix is incorrect.
A marketing mix must carefully be created to reach the specific target market that a company is trying to reach. For example, there is a big difference between McDonald's and Wendy's fast food restaurants. The mixes are carefully created to cater to cheap packaged food with family fun play areas (McDonald's) and healthier fast food, fresh burgers made to order and no playgrounds (Wendy's).
Product Strategies
The heart of the marketing mix is of course the product or service. It is the beginning point of the entire mix and strategy. When referring to a product, you also must consider the packaging, warranty, after-sales follow-up, brand name and company name. After all, eating at TGI Friday's is a big difference than eating at Morton's Steakhouse. All of these factors come into play when creating a product strategy. Products can be tangible goods, such as televisions, or services, such as spa treatments.
Place Strategies
Where can you get the product or service? Do you need to get in your car and drive to a store? Can you order it online? Place strategies are all about making the product or service available to the consumers when they want and need them. Another part of the definition is that place takes into account how the product gets to the consumer through storing, transporting, and delivering. The recent popularity is for products to be available quickly online. Many brick and mortar stores have been driven out of business due to the recession and the plethora of online businesses that can reach national consumers.
Promotion Strategies
The third P is promotion strategies. Promotion strategies include personal selling, advertising, public relations, and sales promotion. Promotion's central purpose is to inform, educate, persuade and remind consumers about products or services. An effective promotional campaign, such as the recent Old Spice Guy ads, created a demand for deodorant.
Pricing Strategies
Price is the cost a consumer must pay for the product or service. It is also the most flexible of the Ps. Companies can change the price quickly to react to competitors. When one airline decides to have a ticket sale, the other airlines immediately react to match or surpass their competitors' offerings. Sometimes this drives the prices extremely low which ultimately benefits the consumer. Price multiplied by the number of units equals the firm's total revenue.
It is also important to consider the more subtle aspects of price. For example, consumers may be willing to pay more for a product that seldom needs repairs (Maytag washers played on this image for years) or has a generous warranty when a repair is needed (Hyundai auto used this approach to break into the U.S. market). An easy-to-reach customer service function, such as American Express has, may be worth a higher price to you. Or, adaptability in a tech era may mean that you do not have to purchase new accessories when upgrading your smartphone. Isn't that potentially worth a slightly higher price?
Implementation and Control
The final part of a marketing mix is the implementation and encompasses how the plan can be translated into actionable activities. The activities must be achievable and very detailed. The parts included must be assignment of tasks, activities, timelines, budgets and communication between all of the corporate departments. Control is a method of evaluating the plan to see if it was successful. Many companies fail to conduct research on whether the plan worked or not. There are four main reasons why a marketing plan can fail: unrealistic marketing objectives, inappropriate marketing strategies, poor implementation, and major environmental changes that a company did not plan to happen.
Lesson Summary
The first step in the plan of creating an effective marketing strategy is to select a target market that a company's product or service will service. A target market is a defined group most likely to buy a company's product or service. There are different types of target market strategies as well. They are focusing on an entire market with one marketing mix, concentrating on one segment, and targeting many segments with multiple marketing mixes. Once a company has decided on a target market strategy, they then must create a well-organized marketing mix. A marketing mix consists of the Four P's which are product, place, price, and promotion. The final piece of the marketing plan is implementation and control which allows management to determine if the plan was a success.
Learning Outcomes
After watching this lesson, you should be able to:
- Define target market
- Identify how target markets are determined through marketing strategies
- Explain how the Four P's play a role in reaching the right target market
